Feb 8, 2019

The Trump admin's drug rebate rule has a timing problem

Health and Human Services Secretary Alex Azar. Photo: Chip Somodevilla/Getty Images

The Trump administration's recent proposal to change the way drug prices are negotiated in Medicare and Medicaid is operating under a tight timeline, and some are skeptical that it can be solidified by 2020.

Why it matters: The new policy would raise Medicare Part D premiums once it takes effect. For now, the premium hike is expected to be announced this fall. But if implementation is delayed, that hike could come in the fall of 2020 — right before the presidential election.

The big picture: The proposal would change the way drug prices are negotiated behind the scenes, phasing out the drug rebates collected by insurers and replacing them with discounts to consumers at the pharmacy counter.

  • Insurers currently use rebates to lower premiums. The new rule is expected to lower out-of-pocket costs for seniors who currently pay a lot for their drugs, but raise premiums for Medicare Part D by as much as 25% over the next decade, per the federal government's analysis.
  • While the change is expected to take place beginning in January of next year, insurance plans are developed and locked in over a rigid timeline that essentially must be completed by June.
  • "Health insurance providers are concerned over the timeline of implementing for 2020," said Kristine Grow, a spokeswomen for America's Health Insurance Plans.

Details: The public has 60 days to weigh in, which will be followed by another 60-day period for HHS to evaluate the comments. A final rule should come out around May.

  • Meanwhile, companies have to submit their drug plans by May, and final bids for Medicare drug plans have to be submitted by June. That leaves almost no time for the industry to reconcile the rule with their 2020 plans.

The bottom line: Part D premiums are heavily subsidized, but the politics of raising seniors' health care costs are never good.

  • Insurers won't be happy to find themselves in the line of fire regardless of when the changes take place.
  • Democrats would love to weaponize seniors' health care costs right ahead of the 2020 elections. And Republicans can't be excited to have that problem on their hands, though they could also see some benefit from seniors who see their costs at the pharmacy counter fall.

Go deeper

World coronavirus updates: Governments tighten restrictions to curb cases surge

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens and confirmed plus presumptive cases from the CDC

Japan's Prime Minister Shinzo Abe announced plans to declare a state of emergency and a 108 trillion yen ($990 billion) stimulus package Tuesday, as several governments announced new restrictions amid a jump in cases.

The big picture: The virus is confirmed to have killed almost 75,000 people and infected 1.3 million globally as of early Tuesday, per Johns Hopkins data. Spain has reported the most cases outside the U.S. (more than 136,000) and Italy the most deaths (over 16,000) as half the planet's population is now on lockdown.

Go deeperArrowUpdated 31 mins ago - Health

Boris Johnson in intensive care as coronavirus symptoms worsen

Photo: Peter Summers/Getty Images

U.K. Prime Minister Boris Johnson is being treated in the intensive care unit of St. Thomas' Hospital in London due to increasingly severe coronavirus symptoms.

What they're saying: Cabinet minister Michael Gove told LBC radio on Tuesday morning Johnson was not on a ventilator. "The prime minister has received some oxygen support and he is kept under, of course, close supervision," he said.

Go deeperArrowUpdated 1 hour ago - World

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 3 a.m. ET: 1,348,184— Total deaths: 74,834 — Total recoveries: 284,802Map.
  2. U.S.: Total confirmed cases as of 3 a.m. ET: 368,376 — Total deaths: 10,989 — Total recoveries: 19,828Map.
  3. Trump administration latest: President Trump's economic adviser Peter Navarro warned White House colleagues in late January the coronavirus could take over half a million American lives and cost close to $6 trillion, memos obtained by Axios show.
  4. 2020 update: Wisconsin Supreme Court blocks governor's attempt to delay in-person primary voting delayed until June.
  5. States latest: West Coast states send ventilators to New York and other states with more immediate need — Data suggest coronavirus curve may be flattening in New York, Gov. Andrew Cuomo said.
  6. World update: U.K. Prime Minister Boris Johnson moved to intensive care as coronavirus symptoms worsen.
  7. Stocks latest: The S&P 500 closed up 7% on Monday, while the Dow rose more than 1,500 points.
  8. What should I do? Pets, moving and personal health. Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  9. Other resources: CDC on how to avoid the virus, what to do if you get it.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.